Decommissioning Offshore Europe Seminar - September 6th 2017 - Oil and Gas Authority
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Decommissioning
Offshore Europe Seminar
September 6th 2017
Outline 1. Accountabilities - Pauline Innes 2. Regulatory Guidance - Pauline Innes 3. Decommissioning Context - Gunther Newcombe 4. Cost Estimate and Certainty - Neil Edward 5. Operator Engagement - John Ibbotson and Ian Fozdar 6. Delivery Capability - Bill Cattanach 7. Well P&A - Michael Comfort and John Youles
Accountabilities
Regulator Roles
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning – Status Update
OGA and OPRED working together
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 2
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
OPRED’s role in Government
Department for Business, Energy & Industrial Strategy (BEIS)
Energy Development
(Headquartered in London - Emily Bourne)
Offshore Petroleum Regulator (OPRED)
for Environment & Decommissioning Oil and Gas Authority (OGA)
Chief Executive - Wendy Kennedy Chief Executive - Andy Samuel
(Aberdeen) (London and Aberdeen)
Policy and Corporate
Environmental
Governance Decommissioning (ODU)
Operations
Director - Sarah Director - Pauline Innes
Director - Jonathan Ward
Pritchard
Clear accountability for offshore oil and gas decommissioning
policy, regulation and approval within BEIS
3
ODU and OGA Remits
ODU OGA
Approval and regulate Working to assess and
decommissioning minimise decommissioning
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programmes for UKCS oil
and gas installations and
costs
pipelines
Working with supply chain
Decommissioning policy
and guidance
Delivering MER UK
Protect against risk of
companies defaulting
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning – Status UpdateOGA and ODU working together
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 4
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
Regulatory Guidance
Legislation, International Obligations
& Policy Guidance
What we consider
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Part
IV
Guidance Notes
Decommissioning of
Offshore Oil and Gas Installations and
Pipelines
under the Petroleum Act 1998
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
5
Decommissioning UKCS Offshore
Installations & Pipelines
Regulatory decisions balance a number of legislative and policy
consideration to ultimately agree an acceptable
decommissioning solution
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Safe, efficient Master title style
Minimise risk
to the
and cost
environment
effective
and other
users of the
sea
Aim to achieve a clear
seabed
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
6
Factors taken into consideration
Impact on the Other users of the
Stakeholders sea
Environment
and public Views of the
Views of OPRED
view from Fishermen’s
Environmental
consultation organisations
Managers
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Technical
feasibility
Views of the
Technical
Specialist Approval of a
OPRED Decommissioning
programme
Secretary of State
Economics and
Impact on Safety Cost
Views of the Views of the
HSE Decom team
in OGA
We have a Comparative Assessment system which assesses 5 key areas to
Clickensure
to edit Masterdecision
a balanced subtitlein style
determining the decommissioning solution.
© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
7Decommissioning Context
Strategy & Programme
Cost certainty and reduction
Government
Driving targeted cost efficiency programmes including innovative and regional approaches with
extensive and effective knowledge sharing and best practice adoption
• Long standing
• Robust
Delivery capability
• Globally recognised
Developing an efficient and exportable low cost and profitable delivery capability supported by a
competent and efficient supply chain, a selection of business execution models all designed to
allocate risk, align industry participants and drive down costs
Scope, guidance and stakeholder engagement
Click to edit Master title style Working with BEIS and other relevant parties to identify and evaluate opportunities to further
optimise and define parameters for decommissioning scope and improve industry engagement
Builds on the Strategy
Focus over the next year
Sets out a number of key deliverables
Clear action plan and timetable for delivery
Reviewed on an annual basis
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© OGA 2017
Jointly developed by OGA & Industry & issued in 2016
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 8
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFOGA Decommissioning Team
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© OGA 2017
Currently in process of recruiting a new Head of Decommissioning
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 9
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFDecommissioning Programme
Review Process
• Standard review template
• Agreed with OGA and
OPRED & in use
• Addresses:
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– Cost estimate and
minimisation
• Timing
• OGA engagement
• Reuse
• Collaboration
• Benchmarking
• Future steps
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning – Status UpdateOGA & OPRED working together
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 10
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFCOP & DP Forecast
Major
Others
Source: 2016 Stewardship Survey
Volume of COP’s & decommissioning plans increasing into 2018 with majority in SNS 11Operator Decommissioning Costs
7
Gross Forecast Decommissioning Expenditure (£bn)
Majors
6
Others
5
4
Five companies’
3 assets amount to
50% of total
decommissioning
2 costs
1
Source: OGA Stewardship Survey 2016
0
Decommissioning – Status Update 12Decommissioning Spend
Click to edit Master title style
Click to edit Master subtitle style Source: 2016 Stewardship Survey
© OGA 2017
OGA–need
Statusto work with industry to optimise collaboration and phasing
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 13
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFKey Deliverables
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Activities 2017 2017 2017 2017 2018 2018 2018 2018
Cost
Cost Estimate HMT Cost Cost Estimate HMT Cost
Report Profiles Report Profiles
Delivery Capability Reissue Delivery
SCAP DNS / Accenture
DTF Workshop Programme
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Well P&A
Engagements & Select Delivery External Report
Workshops Plan
Operator Engagement
Internal External
Strategy & Plan Engagement
Plan
Regulations in Practice
Road Test CNS Workshop External Update
Workshop
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Key
Decommissioning – Status deliverables for OGA decommissioning team
Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 14
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFCost Estimate & Certainty
Cost Estimate
• Based on UKCS 2016/2017
Stewardship Survey utilizing operator
supplied data with current and
proposed offshore facilities, pipelines,
all wells and onshore terminals
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• Probabilistic approach used by
combining ranges from survey
classifications
• Approach and outputs reviewed with
OPRED, HMT, HMRC and assured
independently with Rider Hunt
• P50 probabilistic estimate is £59.7bn
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
OGA– Status
Decommissioning UKCSUpdate
decommissioning probabilistic cost estimate £59.7bn
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 15
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFNeed for Change
P90
• Industry and government have
Probability
P50
shared desire to minimise cost Business as
usual
• Awareness that business as usual P10
will not be sufficient to transform
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cost
Cost
• Typical improvements of 35%
seen in other industries e.g. P90
automotive and aviation
Transformational
• Minimum target of £39bn based Probability
P50 approach
on 35% improvement on £59.7bn
P10
Cost
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning – StatusIndustry
Update decommissioning cost target £39bn
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 16
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFIndustry Performance
Brent Murchison SNS
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Estimated cost decreased over £1bn 2 years ahead of schedule, estimated Internal well P&A campaigns delivering
over past 2 years final cost 88% of sanction cost 50% cost reductions
Work with supply chain: cost
reduction in topsides and substructure Lessons learned to help half cost of Optimisation of schedule and market
removal future projects flexibility
Reduced well P&A costs: execution &
contracting strategy, efficiency Early engagement with contractors, Multi-operator well P&A to further
improvements flexibility of schedule reduce costs and share experiences
Learning transferable: Shell willing to Sharing/engagement with regulators,
Engaging with SNS peers/industry
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share peers and industry
© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Tangible evidence of significant cost saving by industry
Decommissioning – Status Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
17Measuring Progress
• Future cost estimates will be
normalised against 2016 baseline
taking into account Inflation, scope
Progress towards P50 Target
additions & completions
• Values plotted to give a
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percentage realisation towards
target
• Improvements in estimates will be
identified through operator
engagements
• Reduction of 35% is at industry
level and not expected from every
operator for every asset Time
Decommissioning – Status Update
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Significant
Decommissioning cost improvements expected in next 10 years towards £39bn target
– Status Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
18OGA and Industry Next Steps
• Decommissioning cost report issued 29th
June, communicating current estimated cost
(£59.7bn) and target (150
Northern North Sea
Mass (Te)
450
16,200
Premise
Remove
Remove
Pipeline(s)
Ref.:
PL631
PL870
Description
Inde D Platform (Perenco) to Inde CP Platform (Perenco)
Ninian Southern Platform to Tie In At Base of NSP
OD (")
2
12
Dist.(km)
5
25
0
0
0
Product
Chemical Injector Part Remove
Injector Water Leave
0
0
0
Premise
Wells
Well Base
Platform
OGUK Type
Type 0
Type 1
Type 2
Type 3
Type 4
Well-Count
0
0
7
0
17
Execution Plan
Late-Life Management
Conclusion Added on Cost Category review tab
key initiatives during 2017/2018
0 0 Type 0 0
0 0 Type 1 0
0 0 Subsea Type 2 0
0 0 Type 3 0 P&A
0 0 Type 4 0 Conclusion Added on Cost Category review tab
Scope & Cost Phasing (£MM) Prior Years Future Cost L/Cycle Cost Est.Quality % Lifecycle 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 +
Operator Proj.Mgmt £ 1 MM £ 16 MM £ 17 MM AACE Class 3 5% £1 £2 £3 £3 £3 £2 £2 £ - £ - £ - £ - £ - £ - £ - £ -
Running/Owners Costs £ 3 MM £ 66 MM £ 69 MM AACE Class 3 21% £1 £20 £20 £20 £5 £ - £ - £ - £ - £ - £ - £ - £ - £ - £ -
Well P&A £ 4 MM £ 85 MM £ 89 MM AACE Class 3 27% £5 £20 £40 £20 £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - £ -
Fac./Pipelines Make Safe £ 5 MM £ 3 MM £ 8 MM AACE Class 3 2% £ - £ - £3 £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - £ -
Topsides Preparation £ 1 MM £ 2 MM £ 3 MM AACE Class 3 £ - £ - £2 £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - £ -
Topsides Removal £ 2 MM £ 125 MM £ 127 MM AACE Class 3 £ - £ - £ - £50 £75 £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - Fac./Pipeline Make Safe
Sub-structure removal £ 3 MM £ 4 MM £ 7 MM AACE Class 3 £ - £ - £ - £1 £3 £ - £ - £ - £ - £ - £ - £ - £ - £ - £ - Conclusion Added on Cost Category review tab
44%
Super-/Sub-structure recycling £ 2 MM £ 1 MM £ 3 MM AACE Class 3 £ - £ - £ - £ - £ - £1 £ - £ - £ - £ - £ - £ - £ - £ - £ -
Subsea infrastructure £ 0 MM £ 0 MM £ 0 MM AACE Class 3 £ - £ - £ - £ - £ - £0 £ - £ - £ - £ - £ - £ - £ - £ - £ -
Site remediation £ 2 MM £ 1 MM £ 3 MM AACE Class 3 £ - £ - £ - £ - £ - £ - £1 £ - £ - £ - £ - £ - £ - £ - £ -
Monitoring £ 1 MM £ 1 MM £ 2 MM AACE Class 3 1% £ - £ - £ - £ - £ - £ - £1 £ - £ - £ - £1 £ - £ - £ - £0
Cessation of Production (Year) 2018 £ 304 MM £ 328 MM
Warm Stack
Cold Stack Removals & Recycling
Conclusion Added on Cost Category review tab
Decommissioning Project Cost Uncertainty and UKCS Benchmarks Decommissioning Cost Breakdown (WBS)
Scope & Cost Phasing (£MM)
Prior Years Future Cost
£200 Operator Proj.Mgmt £ 1 £ 16 £200
Running/Owners Costs £ 3 £ 66
Well P&A £ 4 £ 85
Fac./Pipelines Make Safe
£ 5 £ 3 Project P10 - P90 Range 2% 1%0% 1% 1% 5%
Topsides Preparation£ 1 £ 2 Contracting
Topsides Removal £ 2 £ 125 Project Lifecycle Total Spend Conclusion Added on Cost Category review tab
Sub-structure removal£ 3 £ 4
Super-/Sub-structure £
recycling 2 £ 1
Subsea infrastructure£ - £ 0 UKCS Benchmark P10 - P50 Range 21%
Site remediation £ 2 £ 1
£150 Monitoring £ 1 £ 1 £150
Business Environment
Conclusion Added on Cost Category review tab
39%
• Update decommissioning stewardship survey
Operating Model
£100 £100
Conclusion Added on Cost Category review tab
Industry Collaboration
Conclusion Added on Cost Category review tab
£50 £50
27%
1%
2% Facilities re-use / Carbon Capture & Storage
Conclusion Added on Cost Category review tab
in 2017 to provide improved information on
Operator Proj.Mgmt Running/Owners Costs Well P&A Fac./Pipelines Make Safe Topsides Preparation Topsides Removal
£0 £0
Project Management Post-CoP Running Costs Well P&A Facilities/Pipelines Make Topsides & Substructure Topsides & Substructure Subsea infrastructure Site remediation Monitoring Sub-structure removal Super-/Sub-structure recycling Subsea infrastructure Site remediation Monitoring
Safe Prep. + Removal recycling & disposal
Saving Opportunities vs Min vs Mode
Decommissioning Cost Phasing
Project Management £1 £0 MM
£100
Post-CoP Running Costs £63 £0 MM
Well P&A £47 £31 MM £90
Facilities/Pipelines Make Safe £5 £0 MM
Topsides & Substructure Prep. + Removal £97 £3 MM £80
Topsides & Substructure recycling & disposal £2 £1 MM
Subsea infrastructure £0 £0 MM £70
Site remediation £2 £0 MM
£60
Monitoring £1 £0 MM
Total £218 £36 MM
MM
£50
Summary / Conclusion 23 March 2017 I.Fozdar £40
Conclusion Added on Cost Category review tab
£30
decommissioning cost
£20
£10
£-
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 +
Operator Proj.Mgmt Running/Owners Costs Well P&A Fac./Pipelines Make Safe Topsides Preparation Topsides Removal Sub-structure removal Super-/Sub-structure recycling Subsea infrastructure Site remediation Monitoring
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
OGA and
Decommissioning – Status Industry working on ways to reduce decommissioning costs
Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
19Industry Cost Modelling
• Develop a high level transparent decommissioning economic model that can be
used by industry stakeholders to quantify opportunities for cost reduction
– Create an AACE Class 5 probabilistic model with a transparent
reference case, using OGUK WBS construct using BEIS data set
– Uncertainties such as asset base, end state, condition, methodology,
resources and timing to be appropriately considered
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– Economic model parameters will be explored to identify and articulate
cost reduction opportunities
– Model construct and outputs will be on a basin level basis by WBS to
maintain asset specific anonymity
• OPRED/OGA/OGUK/Industry team established, with steerage by
Decommissioning Task Force (DTF), to construct, review and evaluate the
model and outputs.
• Output will be shared at OGUK St Andrews Decommissioning conference end
November with a publication issued by OGA
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning – StatusCost modelling led by BP with virtual team set up under DTF
Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
20Data Improvement
• 2017 UKCS Stewardship Survey will
include improved decommissioning data
collection processes, additional guidance
and a request for new information on:-
– Contingency
– Rig reactivation costs
– topside/substructure weights
• Click to edit Master title style
Basis of Estimate Guidance
– BOE template published to
coincide with Decommissioning
Cost Estimate Report
– Template provides industry a
standard basis of estimate that
captures and communicates
critical aspects of a project cost
estimate
– Helps operators standardise
input of data in the 2017 UKCS
Stewardship Survey
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© OGA 2017
Decommissioning data quality improvements from 2017 UKCS Stewardship Survey
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Decommissioning – Status Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 21
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFOperator Engagement
Cost Reduction
Cost certainty Delivery Regulatory Well
and reduction Capability Guidance Abandonment
• Benchmarking • Learning from • Improve • Campaign
• Metrics other industries awareness approach to
Owners Cost identifying high • Innovative • Communicate well P&A
cost elements approach to requirements • E&A
Well P&A
• Standardisation contracting & • Develop tools suspended well
of methods commercial e.g. cleaning stewardship
Topside removal
59.7bn • Sharing good strategies • Pilot and
Subsea Infrastructure practice • Changing upscale
Improve decommissioning efficiency
behaviours
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Substructure removal
Onshore recycling
10%-15% 35%-45% 15%-20% 25%-35%
NNS
59.7bn
WoS
CNS
SNS
IS
Potential savings (not additive)
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Key focus areas identified and OGA working with industry
Decommissioning – Status Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HF
22Operator Engagement
• OGA web-based decom ‘regulatory
roadmap’ being updated Q3 2017
• BEIS updating decommissioning
guidance Q4 2017
• OGA Stewardship Implementation
Guide (Decom) issued Q2 2017
• Plan for decom in place 6 years prior to CoP
• Execution & Contract Strategy in place 3 years
prior to CoP
Decommissioning – Status Update
Structured engagement framework 24Operator Dashboard
Facilities Description & Tonnage Well Classification Commentary
Pipelines Description & Tonnage
Operator Input
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Cost Benchmarking Cost Breakdown (WBS)
Areas of Potential Savings Cost Phasing
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Benchmarking
Decommissioning dashboard
– Status Update used to evaluate Operator decommissioning plans
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 25
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFBenchmarking
300
Project P10-P90 Range
Project Lifecycle Total
Spend
250
UKCSBenchmark
UKCS Benchmark P10-P50
P50
Range
UKCS Benchmark P10
200
Cost £ MM
150
100
50
0
Project Post CoP Well P&A Facilities/Pipeline Topsides & Topsides & Subsea Site Monitoring
Management Running Costs Make Safe Substructure Substructure Infrastructure Remediation
Prep & Removal Recycling Disposal
OGA engage operators to challenge, share and transfer best practice 26Delivery Capability
Decommissioning
Supply Overview
Chain Opportunities
Government
• Long standing
• Robust
• Globally recognised
Steel
490,000 Topside 130,000 FPSO 290,000 Jacket 15,000 Substructure
tonnes tonnage tonnes tonnage tonnes tonnes tonnage
tonnage
Click to edit Master title style Around 800
platform and
450 subsea
wells
Source: BEIS Data 2015
Decommissioning – Status Update
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Potential
Decommissioning size of
– Status market based on anticipated COP dates up to end 2015
Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 27
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFMarket Stimulating Initiatives
1. Supply Chain Action Plans (SCAP)
• Concept already used in other energy sectors
• Part of the enhanced asset stewardship process, FDPs and decommissioning plans
• Workgroup with five operators and two supply chain companies means good industry buy-in
2. Decommissioning Supply Chain Capabilities
• SNS PILOT Well P&A Forum – 8 Operators participated - held two SME opportunity Hackathon events
• Report on UK supply chain decommissioning capability and capacity is being prepared
• Working with governments and industry to promote UK port and yards capability
3. 2035 Vision For Vision 2035 to be
achieved, domestic
• OGA co-chairs the Supply Chain and Exports Taskforce share of work to grow
from 50-65% and share
• Exports workgroup ensures connections with DIT, SDI and UKEF
of international export
• Focus on Norway by working closely with MPE and British Embassy market to grow from
• OGA assessing domestic and international opportunities for the UK Supply Chain 3.7% to 7.4%
4. Influencing and Promoting
• Active participants in developing a Sector Deal
• Supporting new pilot scheme to change tendering between service sector and operators
• Industry demand intelligence portal ‘Project Pathfinder’ covering new and decommissioning projects
OGA working with the service sector
Decommissioning – Status Update 28Onshore Disposal
• Dales Voe Shetland official
opening was on 28th August
to dismantle Buchan Alpha
production facility
• Current site has a water
depth limit (13m) with
requirement to develop a
deeper water facility which
will need a investment
• UK and Scottish governments
supportive of
decommissioning
• Call on industry to provide
funding support
Significant investment
Decommissioning required to develop Dales Voe as first UK “deep-water” site
– Status Update 29Well P&A
Suspended Open Water E&A Wells
• Stewardship process working with largest holders
who hold nearly 40% of suspended open water E&A
wells
• Meetings held with operators in Q2 to understand
their individual plans
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• Review planned in Q3 with all operators to explore
synergies and potential joint programmes
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Current estimate
Decommissioning – Status to P&A all current suspended open water E&A wells is £0.5bn
Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 30
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFMulti Operator Scope
• Cost reduction initiative investigating the optimal means of coordination of
scope for multiple operators for decommissioning
• Desire is that Cost-Optimal solution is available to all operators
• Similar methodology could be applied to any element of scope where timing is
flexible and there are suitable common requirements
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
To date
Decommissioning collaborative
– Status Update approach by operators is not common practice
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 32
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFSubsea Development Wells
• Subsea well P&A expenditure in range £10-15 billion over
next 40 years
• Cost-Optimal execution could be achieved through a
sufficiently large programme of continuous work but not all
operators have scope within own portfolio to construct
such a programme
• Savings in the range 10-30% have also been estimated
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by supply chain companies amd collaboration could yield
further improvements through sharing of knowledge and
experience
• Access to the foundations for cost-optimal execution cash
flow management
• Timing is flexible as there is no significant on going cost
and common requirement for mobile asset and specialist
services
• Provide common testing ground e.g. trial and
implementation of new techniques and technologies
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Value of opportunity £0.5 to £2.25bn
Decommissioning – Status Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 31
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFNext Steps
• Working with operators and supply chain companies
• Appraise coordination options and work through common challenges
• Quantify the opportunity
• Examine whether the current regulatory environment is providing the optimal
solution for HMG
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• Supply chain invite to participate imminent
• Update to be issued at end Q4
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© OGA 2017
This presentation is for illustrative purposes only. The OGA makes no representations or warranties, express or implied, regarding the quality, completeness or accuracy of the information contained herein. All and any such
Objective: Cost-optimal Subsea Well P&A
Decommissioning – Status Update
responsibility and liability is expressly disclaimed. The OGA does not provide endorsements or investment recommendations. Oil and Gas Authority is a limited company registered in England and Wales with registered number 33
09666504 and VAT registered number 249433979. Our registered office is at 21 Bloomsbury Street, London, United Kingdom, WC1B 3HFYou can also read
